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Roche to Buy Seragon for Up to $1.7 Billion for Cancer Drugs

July 2 (Bloomberg) -- Roche Holding AG, the world’s biggest maker of cancer drugs, agreed to buy Seragon Pharmaceuticals Inc. for as much as $1.7 billion to gain a new generation of experimental treatments for breast tumors.

Roche will pay $725 million in cash for Seragon, a closely held company based in San Diego, and as much as $1 billion extra if certain development targets are met, the Basel, Switzerland- based company said in a statement today.

The deal gives Roche drugs designed to stop tumors from growing by blocking estrogen, which about 60 percent of breast cancers depend on to grow and spread. Roche’s existing treatments, such as Herceptin and Perjeta, treat women whose cancer cells have a gene mutation that results in the generation of extra proteins known as HER2. Such HER2-positive cancers account for about 20 percent of cases.

“This acquisition will allow Roche to fill a gap in its pipeline,” Olav Zilian, an analyst at Helvea SA in Geneva, wrote in a report. “If this acquired compound turns out to be successful, it will allow Roche to expand its activities in oncology substantially.”

Seragon’s lead drug, ARN-810, is in early-stage tests among women with so-called hormone receptor-positive breast cancer that resisted other medicines. The drug isn’t likely to reach the market for six to eight years, Zilian said.

Redefining Care

Seragon’s technology “could one day redefine the standard of care for hormone receptor-positive breast cancer,” Richard Scheller, head of research and early development for Roche’s Genentech unit, said in the statement.

Seragon was founded last year by the same scientists who formed Aragon Pharmaceuticals Inc., the company that Johnson & Johnson bought in August for as much as $1 billion. Its investors include Aisling Capital, the Column Group, OrbiMed, VenBio and Topspin.

Richard Heyman, chief executive officer at Seragon, co- founded Aragon and served as its CEO. Edna Chow Maneval and Nicholas D. Smith, both former Aragon executives, are Seragon’s vice president of clinical research and vice president of chemistry, respectively.

Roche rose 0.1 percent to 264.50 Swiss francs at 2:11 p.m. in Zurich trading.

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